The size of the social impact investment market grew by 7 per cent to £10bn last year, new figures show. 

Data from the social investment wholesaler Better Society Capital says the size of the market has grown twelvefold in the 12 years to the end of 2023. 

It said social impact investing continued to demonstrate stability despite “economic uncertainties” and the organisation is calling for “active partnership” from the government to unlock more investment.

Charity loans and social enterprises saw a “significant” growth of 16 per cent from 2022 to 2023, reaching £4.1bn by the end of last year.

Better Society Capital said this growth was driven by charity bonds and increases in bank lending and debt funds.

“This steady increase in lending highlights the sector’s potential to attract more capital, a key consideration for the government as it seeks to stimulate investment through its growth-focused policies,” Better Society Capital said.

Social housing investment remained consistent at £5.1bn in both 2022 and 2023.

Better Society Capital has also for the first time estimated the number of different types of investors that are active in the market, based on data from more than 1,000 investors.

“The data shows that pension funds provide 21 per cent of investment, with the highest concentration in social and affordable housing,” Better Society Capital said.

“Endowments and charities are the second largest investor group, committing 14 per cent of the investment.”

Stephen Muers, chief executive of Better Society Capital, said the new government meant there was a unique opportunity to shape policies encouraging more social investment.

“It is a source of encouragement that the UK social impact investment market grew once again last year,” he said.

“However, we must not lose sight of the significant challenges ahead, whether that’s in housing, social inequality and the disparity in health and wellbeing across the UK.

“As we look to the future, it is crucial for investors, businesses, and the government to work closely together to channel investment towards organisations that need it.

“With the Labour government’s focus on growth we have a unique opportunity to shape policies that encourage more capital into impactful projects that benefit society, ease the burden on the treasury and support the economy.”

Stephanie Peacock, the Minister for Civil Society, said: “Labour has a proud history in this area – with Gordon Brown setting up the idea of impact investment from social bonds.

“As we set our priorities as a mission driven government, we look forward to continuing this legacy by championing the growing impact investment sector, who harness the innovation and entrepreneurship in our country and direct it towards a common good.”

“From assets of community value to cooperatives – we want to see more projects being funded where they are needed most.”